Profitable, Resilient and Sustainable Supply Chains

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Competing successfully in today's business world poses significant challenges to Canadian firms. Customers are more diverse in terms of their needs and preferences, and they are more demanding in terms of product performance, price and customer service. They also pay more attention to where the products come from and whether they are sourced from socially and environmentally acceptable practices. At the same time, the supply chains Canadian firms operate have become more interconnected and global. Therefore, they have also become more vulnerable with more potential points of failure and with less margin of error for absorbing delays and disruptions. These long supply chains lack visibility, especially into the lower tiers, which render operational control less effective. Matching demand and supply in this risk ridden global environment is particularly intricate. The ultimate objective of our research program is to improve the profitability, resilience and sustainability of Canadian firms against this backdrop. To this end, we propose a carefully crafted, two-stage research program that takes a fresh look into these risks by dwelling more on their prominent sources, and develops integrated strategies to create sustained value to the customer and to the firm. The first stage of our program will consist of two major themes focusing on demand and supply risks. Theme I will examine demand side risks, in particular the uncertainties that govern the consumer and the consumer choice process (e.g., about prices, product performance, value attached). It is possible to provide consumers some protection against these risks via novel contingent selling arrangements (e.g., price match, money-back guarantee). We will develop a framework to systematically categorize these risks and identify contingent arrangements to mitigate them. We will then design models to optimize firm profits under such selling strategies, while at the same time paying attention to operational decisions such as inventory levels. Theme II, we will examine supply-side risks, in particular the uncertainties emanating from less visible, second or lower tiers (sub-tiers) of the supply chain. Both supply disruption risks and risks related to non-compliance with environmental and social standards will be considered under this theme. We will develop analytical models to explore the impact these risks have and design appropriate control mechanisms to moderate the detrimental effects. During the second stage of the program, we will utilize the theoretical results and practical insights generated from the first stage in order to build a decision-support system for realistic-sized supply chains. We intend to construct large-scale models and develop heuristic solution methods utilizing real data. This decision-support tool will assist making strategic and tactical decisions related to sourcing, inventory placement, and demand optimization. We believe our cross-functional research program investigates timely and practically relevant issues, and has the potential to make significant contributions to the scholarly literature. Furthermore, by taking into account the trade-offs between risks and costs, our integrated models will help to develop strategies to improve the resilience, sustainability and profitability of Canadian firms.